Press comment: ‘Better the devil you know’ as Carney deal extended

Date: Friday, 14 September 2018

If you are covering today’s announcement that Mark Carney’s tenure at the Bank of England has been extended, please see the following commentary from Quilter Investors head of investment, Anthony Gillham:

“As reported last week, Mark Carney’s term at the Bank of England has been extended as the UK government looks to provide some reassurance around monetary policy through what will surely be a topsy-turvy period. Extending his term through until early 2020 means that the Bank and the Monetary Policy Committee, which sets interest rates, will be managed by a familiar face for another 18 months. Markets are fond of certainty and this does seem to be a case of ‘better the devil you know’, since Carney hasn’t always been universally popular, but offers continuity and is a known quantity.

“It will be interesting to see whether this extension influences the Bank’s thinking in any way. Given the government has expressly stated that it is looking for stability, and Mark Carney knows his tenure has been extended in an effort to keep the bank in safe hands through a transitory period, there may just be a sub-conscious temptation to leave rates untouched if the case for future hikes is debatable.

“When the search begins next year for a long-term successor, there should be a greater degree of clarity around the UK’s relationship with the EU and government will in theory be in a better position to make an informed decision about the appropriate candidate to oversee central bank policy.”

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